Lecture 1, Introduction to ethics
Utilitarianism (Consequences): ‘an action is right if it promotes the best consequences’
- If you’re judging the donor show on its consequences, what can you say?
o Bad reputation for the Netherlands, we are ridiculed by other countries
o Raised donorship awareness
o What about the heart/lung diseases, what was the consequence for them? They
noticed that all attention went to the kidney diseases
- Many people changed their opinions on the show after finding out the consequences.
However, there were also negative consequences which were not easy to measure e.g. how
much is the trust of TV viewers affected. You have to try to take ALL THE CONSEQUENCES
into account.
How do we measure consequences? And how do you define the ‘best consequence’?
The problem is that you’re never sure how the consequences play out. The makers of the show were
not sure what the response would be. What if the negatives consequences were much higher?
Two difficulties:
1. What does the ‘best consequence’ mean?
o John Stuart Mill mentions that ‘the greatest happiness for the greatest number’ is
the best consequence. However, happiness is different for different people so how
can we weigh this? Do we also take animals into account, the environment?
2. How do we know about ripple effects (how far in the future do we look)?
o Damaged trust of the Dutch citizens
Deontology (Rules/ duty): an action is right if it is in accordance with a correct oral rule or principle
- The Donor show lied to the Dutch audience, the viewers feel angry and foolish
- Even though the consequences would be really positive, if you ‘break the rules’ you still
shouldn’t do it
o E.g. killing Hitler is against the rules, however as a consequence there would be a lot
less suffering.
But which rules? 10 commandments maybe? Immanuel Kant said this: ‘act only in such a way that
1. you would be willing for the principle of your action to be a universal law, and
2. you treat other human beings with respect’
Virtue ethics (Character): an action is right if it is what a good person would characteristically do
under the circumstances
- Virtues: character trades that help you make the right decisions in certain circumstances
- What would a person I admire do in these circumstances? e.g. ‘what would my mom do?’
o In some circumstances it might be better to lie (not according to deontology)
- More holistic approach
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,Lecture 2, Applied ethics (looking at Al Dunlap)
Albert Dunlap: “I’m a superstar in my field, much like Michael Jordan in basketball. My pay should be
compared to superstars in other fields, not to the average CEO.’ Dunlap was known for his radical
policies and corporate restructuring e.g. he does hostile takeovers and is not afraid of firing people.
He fires people and puts his own people in management etc. Although he is judged to be too radical
and even enjoying firing people, his methods were often very productive.
However, it is found that he had been ‘channel stuffing’. He reported sales in the wrong year. Besides
this, he used inside knowledge in buying stocks. He got fined and was not allowed to be CEO
anymore. Later on he invests a lot in a university and they build a statue of him. Ask yourself why the
university used him as a ‘moral exemplar’?
Ethical perspective:
Consequences/ Utilitarianism:
- Who is affected by his actions? (which stakeholders)
o Employees at all levels and their families
o Shareholders
o University students (his money leads to scholarships etc.)
- Overall happiness went down = bad
Rules/ Deontology:
- He broke accounting rules
- Remember Kant ‘you treat other human beings with respect’, but the way in which Dunlap
was firing people was not with respect.
o Firing people might be necessary, but the way in which he does it is bad. Does he
even know enough about the company to fire all these people on the first day?
Character/ Virtue ethics:
- If someone fires you with sincere empathy, because there have to be layoffs, it can soften
the blow
- However, if someone is faking to be empathetic this only makes it worse
Homo economicus: When you enter the market you should act rationally and not empathetic
- There are traits in our personal life that we should disregard in business according to
economists ‘there is no time for empathy on the market’
- Empathy gets in the way of running an efficient business e.g. when firing people
When you are a psychopath, in what way are you different form regular people? You lack empathy,
they are essentially ruthless they do not feel bad when harming others. They don’t feel (emotional/
physical) pain when they hurt others
- Different studies show different things, but 10% of CEO’s are psychopaths while in the whole
population only 1% is psychopath.
- Jon Ronson believes that capitalist society encourages the kind of ruthlessness that is
characteristic for psychopaths. Ronson discusses the checklist of psychopath characteristics
with Dunlap. Dunlap turns all the characteristics into things a great leader should have.
o E.g. manipulative → Dunlap: ‘I think you could describe that as leadership. Inspire, I
think it’s called leadership’
So the questions is, does character matter? Many traditional economists say, no ‘As long as the
value of the shares increases, it is good.’ But more critique has risen about this e.g. think of the
environment and climate change (caused by ripple effects!)
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,Talking about virtue ethics, becoming a good person is like being a good soccer player:
- Practice; do tons of drills so you know what to do when you are on the field. Even though
the circumstances are always new, you have developed the skills to deal with this unique
situation.
- Habit, habituate yourself into good behavior no matter what the circumstance is
- Advice, you should always be open to advice!
- Importance of social structures, social structure to a large extent determine how you can
act e.g. you are part of a society where capitalism is the norm
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, Lecture 3, Why markets are great
What is (un)ethical in the market sphere?
- What are the moral benefits, problems, and limits of markets?
o What is so great/bad about markets?
- What are the ethical responsibilities of companies?
The Big Three (ethical theories):
1. Utilitarianism (Mill): actions, policies, institutions should maximize utility
2. Deontology (Kant): actions, policies, institutions should adhere to ethical principles and rules
3. Virtue ethics (Aristotle): people should act as virtuous people would act
Ethical theories systematize moral intuitions, opinions about what is right and wrong. These apply to
- Personal decisions in everyday life; what should I eat? How should I travel?
- Professional decisions in businesses; how should I treat colleagues? Should CEOs maximize
shareholder value?
- Policies
- Institutions; How should we organize our societies? Which social institutions
are most desirable? What are relevant values here? Freedom, justice,
equality, solidarity, health, wealth, happiness
Market: a decentralized order where people freely exchange products and services, the production,
distribution and consumption of which happens on the basis of prices. Characteristics: Trade,
exchange, supply, demand, prices, willingness to pay
- Minimal approach to market definition: ‘a market as a “community of advantage” (Mill 1871;
Sugden 2019) that offers participants opportunities and incentives to interact in mutually
beneficial ways.’
- When economists talk about markets they often talk about an ideal market relying on very
demanding, unrealistic assumptions (e.g. no nepotism, perfectly rational etc.)
Why are market great?
- Because they are efficient
- Because they stimulate innovation
- Because they create the best products at the lowest price
- Because they generate economic growth
- Because they increase material wealth
- Because they make everyone better off (win-win)
- Because they maximize utility (as happiness or preference satisfaction)
- Because they reward those who work hard
- Because they are fair
- Because they allow people to choose freely (what they prefer in terms of consumption and
work)
- Because they counter hierarchy and centralization of power;
These arguments typically compare markets with other institutions, e.g. states
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